So you’re looking for a new car? Congrats! If you’re in the market for a new vehicle, you should first determine what you can actually afford. And if you’re considering leasing or financing a vehicle, you should understand the total costs involved. That’s because the total amount you can spend = the approved loan amount + cash down payment + trade-in amount. Consider the following factors when calculating your new car budget.

1. Total Price

The total cost of your vehicle is more than just the sticker price; it will also include things like the sales tax, title and registration fees, and optional items, like extended warranties. Keep these in mind and leave yourself some wiggle room with your budget when shopping for a new vehicle. Remember that you will also need to worry about auto insurance, gas, regular maintenance, repairs, registration, and other costs associated with owning a car.

2. Monthly Payments

If you will be financing or leasing a vehicle, then you’ll need to calculate your ideal monthly payments. Keep in mind that your monthly payment will include both principal and interest. The loan term, interest rate, and down payment will all affect your monthly payment. If you can wait to make your purchase until interest rates are lower, then you can afford a more expensive vehicle or save money on your payments.

3. Down Payment

Most vehicle purchases are made with a down payment. The more you can devote to your down payment, the lower your monthly bill will be.

4. Trading In Your Old Car

Have you considered trading-in your old car? It will help reduce the total cost of the new vehicle and can improve your loan terms. Trading in your vehicle may also give you more pull when you are attempting new car negotiations.

5. The 10%–20% Rule

For drivers who want to be frugal with their purchase, you’ll want to devote about 10% of your income towards your vehicle. This means that if you make $3,000 per month, you’ll want to devote $300 per month towards monthly payments for all of your vehicles. (Most people spend about 20% of their income on their transportation, so this may be a more realistic estimate.)

If you’re not planning on financing your new car, then the 10%-20% rule still applies. You’ll want to take 20% of your annual income to determine what you can afford to spend on a vehicle. For instance, at $36,000/year, you’ll be able to spend $7,200 yearly on your vehicle ($36,000 x .20 = $7,200).